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Japanese Yen: 2012-03-18

Japanese Yen

Let us examine June Japanese Yen futures. In recent weeks, many currencies have taken a change in direction. Why? Maybe it was the Greek "default", maybe it is tax season related, maybe it is the Iranian conflict. The truth is that probably no one knows the exact reasons, and that no one ever will, so who cares. What we do know is that currency futures prices moved, and the Yen is no exception. In fact, the Yen made quite a strong move downwards. For those who managed to capitalize on that move, good for you! I was not one of them.

What I am interested in with Yen Futures is finding a bottom, and perhaps an reversal leading to an upwards movement. Let us look at a daily chart for June Yen futures.

We are seeing new lows have been made over the last week. We are also seeing that the MACD histogram did not reciprocate with new lows. Rather, the MACD histogram formed significantly higher lows over the last week. This is telling us that momentum for the downtrend could be faltering.

We have not yet seen the MACD moving averages form a higher low as price moves into new or equal low territory. This will be the signal I will be watching and waiting for. If it occurs, I will consider making a long entry in the hopes of catching an upwards movement. Patience is critical. I was harshly reminded of this a week ago as I foolishly entered into a long trade prematurely. My safety stop got me out promptly. This is what happens when I make trades under the influence of nasty colds and cold medication. A lesson I should have learned long ago.

Summary

I will be watching the Yen closely for the next few weeks waiting for the MACD moving averages to show a divergence with price. If this happens, I will consider entering a buy order looking for an upwards move. I'd rather wait for and never see or miss a buy entry, than enter prematurely (as I did when I was sick last week).